What Is Asset, Its Types And How To Manage Assets

A complete explanation of what is meant by asset, which includes, types, examples, understanding of what are current assets. Check out the discussion regarding assets, current assets and fixed assets here!

In the business world, of course, it cannot be separated from financial calculations in order to achieve business goals.

One of the terms that are often heard and used in finance, accounting, and business is asset.

Assets are very important and crucial for the sustainability of the company.

In this article, you will get to know more about the types, what are current assets, especially related to the topic of questions:

  • What is meant by Assets?
  • Types of Assets in Business?
  • What is the difference between current assets and fixed assets?
  • Examples of Assets?
  • Examples of current assets?

What is Asset?

Asset is everything owned by a company that can be converted into cash.

Wealth in question is a resource that can be in the form of objects or rights that are controlled and previously obtained by the company through past transactions or activities.

In a business, examples of assets or assets can include cash, machinery, property, inventory.

In addition, it can include intangibles such as patents, royalties, and other intellectual property that are recorded on the balance sheet.

In general, a company has 4 types of assets, namely:

  1. Current assets ( current assets )
  2. Fixed assets ( fixed assets )
  3. Long- term investment ( long-term investment )
  4. Intangible fixed assets ( intangible fixed assets )

Read on to find out more about each explanation regarding the topic of  assets, current assets and current assets.

The types of assets and examples are as follows:

In general, the types of assets are divided into four groups, namely current assets, long-term investments, fixed assets, and intangible fixed assets.

The following is what is meant by assets, types of assets along with examples and brief explanations:

Included in Current Assets are the following

Current assets or often referred to as current assets are types of assets that can be easily liquidated (cashed out), with a period of not more than 1 year or 1 accounting cycle.

In order to be recognized as current assets, these assets or resources must be measurable using units of currency.

What is meant by current assets are types of assets that have fairly certain future economic benefits obtained or controlled by a company as a result of past transactions or events.

Referred to as future economic benefits that are quite certain because current assets are company resources that will later be used to carry out activities.

Examples such as business operations, financing, or investment.

Then, it is called the result of past transactions or events because the company acquires and controls assets through transactions and events that have previously been carried out.

Examples such as lending and borrowing transactions with banks, purchases, receivable contracts, issuance of shares, investments, and other transactions.

The following are some examples that include current assets or current assets:

  1. Cash, all assets available in the company’s cash or the equivalent of cash stored in the Bank which can be taken at any time.
  2. Securities, share ownership or other company bonds that have a temporary nature, which can be resold at any time.
  3. Accounts Receivable, claims from the company to other parties (debtors) caused by the sale of goods or services on credit.
  4. Notes Receivable, is a billing order for a person or entity to be able to pay a certain amount of money on a predetermined date, to the person whose name has been mentioned in the letter.
  5. Revenue Receivable, income that has become a right, but has not been paid for.
  6. Prepaid Expenses, payments of expenses that are paid in advance, but have not become an obligation in the period concerned.
  7. Equipment, all equipment used for a smooth business and consumable.
  8. Merchandise Inventory, goods purchased with the intention of resale with the hope to get a profit.

Fixed Assets (Fixed Assets)

Fixed assets are assets owned by the company where its use (economic life) is more than one year.

This type of asset is used for operating expenses, and not for sale.

Every year fixed assets are depreciated and must be calculated in the books.

Fixed assets include:

  1. Land
  2. Building
  3. Machine
  4. Shop and office equipment
  5. Conveyance
  6. and so forth

Long Term Investments

Long- term investment is an investment in another company in the long term.

In addition, to obtain profits and control the company.

Therefore, long-term investment assets can be assets that require patience.

Even the benefits can only be felt when the company has experienced a return on investment.

Long-term investment assets are investments made by investing in the company.

The purpose of doing long-term investment assets is to make a profit or gain and control the company.

Intangible Fixed Assets

Definition of intangible fixed assets is a prerogative of the company and has a value but has no physical form.

Some examples that are included in intangible fixed assets are as follows:

  1. Good willmore value owned by the company due to certain privileges.
  2. Patents are the sole rights granted by the government to a person or entity due to a particular invention.
  3. Copyright, is the sole right granted by the government to a person or entity due to the existence of works of art or writing or intellectual works.
  4. Trademark, is a right granted by the government to an entity to be able to use the name and symbol for its business.
  5. Lease Rights, is the right to be able to use the other party’s fixed assets for a long time in accordance with the previous agreement.
  6. Franchise,is a privilege received by a person or an entity from another party to be able to commercialize certain formulas, techniques, or products.

That’s the understanding and types of accounting assets that you should know.

As a business owner, you are required to learn everything about assets in order to determine the company’s strategy and operations in a better direction.

One of them is by managing the company’s assets optimally to achieve the desired goals.

The assets of a business are important things that must be managed properly to get benefits for a company, while encouraging the achievement of company goals.

How to Manage Current Assets and Fixed Assets

Managing assets is not an easy thing to do.

Therefore, you can work around this by using accounting software, an online accounting software that makes it easy to implement asset management within the company.

By using the accounting software, you can record and keep a list of company assets, calculate depreciation automatically, to provide asset reports instantly.

Now you understand what an asset is, right? What types of assets do you have in your business? What is the difference between current assets and fixed assets? Which ones include current assets and which ones are not?

Hopefully a complete explanation of what is asset and what’s included in assets, its types, its examples, understanding of what assets, current assets, and fixed assets above can be useful for those of you who need them.

Of course, questions like the ones below will be easily answered now.

  • What is meant by Assets?
  • Types of Assets in Business?
  • What is the difference between current assets and fixed assets?
  • Examples of Assets?
  • Examples of current assets?

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